You said textile manufacturing is moving away from China. Would that mean that India is going to be an immediate beneficiary or do you think it could go to perhaps some LatAm countries?Everybody is going to benefit from it. India has an advantage, as we are more than self-sufficient in cotton. Also, the Indian government has been giving a lot of fiscal support in terms of interest rate subsidies and VAT repayment. So what we have seen over the past five to seven years is that a lot of bed sheets and towel capacity has come up.

Recently, the government also relaxed labour rules for garmenting. So garmenting companies are also coming up and they are becoming more visible. A combination of cost of capital coming down, very strong and secured supply of cotton and yarn and a phased withdrawal by the Chinese give Indian companies good scope to grow. I do not know how it is going to work with the LatAm counties, I can speak more confidently about Indian companies having a good future.

I also want to talk to you about NBFCs. There has been a significant runup in the NBFC companies? What makes you still so positive on them?I do not think I am confident on a blanket basis. When you are dealing with midcaps and smallcaps, you have to be stock-specific. One has to be more bottom-up. So one of the ways to benefit from this whole push towards infrastructure and affordable housing would be to do one of the two things, or perhaps you can do both – one is take direct exposure to infrastructure companies, affordable housing companies or an alternative approach would be to go for NBFCs who would benefit from the growth of infrastructure and affordable housing.

If you follow the latter approach, you can enjoy the underlying growth of the sectors anyway. But you will be secure in terms of being a collateralised lender. That is why one feels NBFCs are a better way to approach some of these high-growth sectors. Within that, you have to be stock specific.

You are not worried about valuations for most of these HFCs, because that is something that is concerning a lot of Street right now?I do not think I am very concerned about valuation. Valuations have run up in the case of HFCs, yes, but you have to be stock specific. Taking a blanket approach is not going to be very rewarding. But there are spots of undervaluation within the sector and that is where one should deploy money.

The other theme that you like is speciality chemicals. Now these stocks have already had their hay days under the sun.This is not a new theme. We have been playing it for the last two years, or perhaps even longer. So one is not recommending buying into these stocks with a short-term view. That would not be very wise thing to do. However, one must see the systemic shifts that are occurring; one, due to focus on pollution and the focus on value addition is making Chinese companies less enthusiastic about this segment.

Also, since textile manufacturing and textile garmenting are moving away from China and into the South Asian region, some of the chemicals manufacturers who service this sector should also move away from China and into India and neighbouring countries.

That is a longer-term shift happening. Currently as you look at the speciality chemicals sector, there are not too many prominent names, but the growth momentum is there. So over the coming two-three-four years, new leaders will emerge, some of the players – who are midcaps or smallcaps right now – would attain size and scale, and along with it, they will start getting valued in the stock markets. We are playing the long-term game over here rather than trying to make money by trading speciality chemicals shares.

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